Correlation Between Tsingtao Brewery and IMPERIAL TOBACCO
Can any of the company-specific risk be diversified away by investing in both Tsingtao Brewery and IMPERIAL TOBACCO at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Tsingtao Brewery and IMPERIAL TOBACCO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tsingtao Brewery and IMPERIAL TOBACCO , you can compare the effects of market volatilities on Tsingtao Brewery and IMPERIAL TOBACCO and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Tsingtao Brewery with a short position of IMPERIAL TOBACCO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tsingtao Brewery and IMPERIAL TOBACCO.
Diversification Opportunities for Tsingtao Brewery and IMPERIAL TOBACCO
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Tsingtao and IMPERIAL is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Tsingtao Brewery and IMPERIAL TOBACCO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IMPERIAL TOBACCO and Tsingtao Brewery is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Tsingtao Brewery are associated (or correlated) with IMPERIAL TOBACCO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IMPERIAL TOBACCO has no effect on the direction of Tsingtao Brewery i.e., Tsingtao Brewery and IMPERIAL TOBACCO go up and down completely randomly.
Pair Corralation between Tsingtao Brewery and IMPERIAL TOBACCO
Assuming the 90 days trading horizon Tsingtao Brewery is expected to generate 2.0 times more return on investment than IMPERIAL TOBACCO. However, Tsingtao Brewery is 2.0 times more volatile than IMPERIAL TOBACCO . It trades about 0.14 of its potential returns per unit of risk. IMPERIAL TOBACCO is currently generating about 0.17 per unit of risk. If you would invest 594.00 in Tsingtao Brewery on October 20, 2024 and sell it today you would earn a total of 55.00 from holding Tsingtao Brewery or generate 9.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tsingtao Brewery vs. IMPERIAL TOBACCO
Performance |
| Timeline |
| Tsingtao Brewery |
| IMPERIAL TOBACCO |
Tsingtao Brewery and IMPERIAL TOBACCO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tsingtao Brewery and IMPERIAL TOBACCO
The main advantage of trading using opposite Tsingtao Brewery and IMPERIAL TOBACCO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tsingtao Brewery position performs unexpectedly, IMPERIAL TOBACCO can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in IMPERIAL TOBACCO will offset losses from the drop in IMPERIAL TOBACCO's long position.| Tsingtao Brewery vs. Thai Beverage Public | Tsingtao Brewery vs. Molson Coors Beverage | Tsingtao Brewery vs. National Beverage Corp | Tsingtao Brewery vs. THAI BEVERAGE |
| IMPERIAL TOBACCO vs. Kingdee International Software | IMPERIAL TOBACCO vs. USWE SPORTS AB | IMPERIAL TOBACCO vs. Columbia Sportswear | IMPERIAL TOBACCO vs. SPORT LISBOA E |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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